3 A2. ASSET MARKET INSTRUCTIONS 1. General Instructions This is an experiment in the economics of market decision making. If you follow the instructions and make good decisions, you might earn a considerable amount of money, which will be paid to you in cash at the end of the experiment. The experiment will consist of a sequence of trading periods in which you will have the opportunity to buy and sell shares. Money in this experiment is expressed in tokens (100 tokens = 1 Dollar). 2. How To Use The Computerized Market. The goods that can be bought and sold in the market are called Shares. On the top panel of your computer screen you can see the Money you have available to buy shares and the number of shares you currently have. If you would like to offer to sell a share, use the text area entitled Enter Ask price. In that text area you can enter the price at which you are offering to sell a share, and then select Submit Ask Price. Please do so now. You will notice that 9 numbers, one submitted by each participant, now appear in the column entitled Ask Price. The lowest ask price will always be on the top of that list and will be highlighted. If you press BUY, you will buy one share for the lowest current ask price. You can also highlight one of the other prices if you wish to buy at a price other than the lowest. Please purchase a share now by highlighting a price and selecting BUY. Since each of you had put a share for sale and attempted to buy a share, if all were successful, you all have the same number of shares you started out with. This is because you bought one share and sold one share. When you buy a share, your Money decreases by the price of the purchase, but your shares increase by one. When you sell a share, your Money increases by the price of the sale, but your shares decrease by one. Purchase prices are displayed in a table and in the graph on the top right part of the screen. If you would like to offer to buy a share, use the text area entitled Enter Bid price. In that text area you can enter the price at which you are offering to buy a share, and then select Submit Bid Price. Please do so now. You will notice that 9 numbers, one submitted by each participant, now appear in the column entitled Bid Price. The highest price will always be on the top of that list and will be highlighted. If you press SELL, you will sell one share for the highest current bid price. You can also highlight one of the other prices if you wish to sell at a price other than the highest. Please sell a share now by highlighting a price and selecting SELL. Since each of you had put a share for purchase and attempted to sell a share, if all were successful, you all have the same number of shares you started out with. This is because you sold one share and bought one share. You will now have a practice period. Your actions in the practice period do not count toward your earnings and do not influence your position later in the experiment. The goal of the practice period is only to master the use of the interface. Please be sure that you have successfully submitted bid prices and ask prices. Also be sure that you have accepted both bid and ask prices. You are free to ask questions, by raising your hand, during the practice period. On the right hand side you have one price diagram showing this period s recent purchase prices (the same in the Purchase Price list). On the horizontal axis will be the number of shares traded, and on the vertical axis is the price paid for that particular share. You will also see a graph on the historical performance of the experiment, where the blue dots indicate the maximum price a share was traded in that period, the black dots indicate the average price, and the red dots indicate the minimum price 3. Specific Instructions for this experiment The experiment will consist of 15 trading periods. In each period, there will be a market open for 240 seconds, in which you may buy and sell shares. Shares are assets with a life of 15 periods, and your inventory of shares carries over from one trading period to the next. You may receive dividends for each share in your inventory at the end of each of the 15 trading periods. At the end of each trading period, including period 15 the computer randomly draws a dividend for the period. Each period, each share you hold at the end of the period: - earns you a dividend of 0 tokens with a probability of 25% - earns you a dividend of 8 tokens with a probability of 25% 3

4 - earns you a dividend of 28 tokens with a probability of 25% - earns you a dividend of 60 tokens with a probability of 25% Each of the four numbers is equally likely. The average dividend in each period is 24. The dividend is added to your cash balance automatically. After the dividend is paid at the end of period 15, there will be no further earnings possible from shares. 4. Average Holding Value Table You can use the following table to help you make decisions. Ending Period Current Period Number of Holding Periods Average Dividend per Period = Average Holding Value per Share in Inventory = = = = = = = = = = = = = = = 24 There are 5 columns in the table. The first column, labeled Ending Period, indicates the last trading period of the experiment. The second column, labeled Current Period, indicates the period during which the average holding value is being calculated. The third column gives the number of holding periods from the period in the second column until the end of the experiment. The fourth column, labeled Average Dividend per Period, gives the average amount that the dividend will be in each period for each unit held in your inventory. The fifth column, labeled Average Holding Value Per Unit of Inventory, gives the average value for each unit held in your inventory from now until the end of the experiment. That is, for each unit you hold in your inventory for the remainder of the experiment, you will earn on average the amount listed in column 5. Suppose for example that there are 7 periods remaining. Since the dividend on a Share has a 25% chance of being 0, a 25% chance of being 8, a 25% chance of being 28 and a 25% chance of being 60 in any period, the dividend is on average 24 per period for each Share. If you hold a Share for 7 periods, the total dividend for the Share over the 7 periods is on average 7*24 = 168. Therefore, the total value of holding a Share over the 7 periods is on average Making Predictions In addition to the money you earn from dividends and trading, you can make money by accurately forecasting the trading prices of all future periods. You will indicate your forecasts before each period begins on the computer screen. The cells correspond to the periods for which you have to make a forecast. Each input box is labeled with a period number representing a period for which you need to make a forecast. The money you receive from your forecasts will be calculated in the following manner Accuracy Within 10% of actual price Within 25% of actual price Your Earnings 5 tokens 2 tokens 4

5 Within 50% of actual price 1 token You may earn money on each and every forecast. The accuracy of each forecast will be evaluated separately. For example, for period 2, your forecast of the period 2 trading price that you made prior to period 1 and your forecast of period 2 trading price that you made prior to period 2 will be evaluated separately from each other. For example, if both fall within 10% of the actual price in period 2, you will earn 2*5 tokens = 10 tokens. If exactly one of the two predictions falls within 10% of the actual price and the other falls within 25% but not 10% you will earn 5 tokens + 2 tokens = 7 tokens. 7. Your Earnings Your earnings for the entire experiment will equal the amount of cash that you have at the end of period 15, after the last dividend has been paid, plus the $5 you receive for participating. The amount of cash you will have is equal to: Money you have at the beginning of the experiment +Dividends you receive +Money received from sales of shares -Money spent on purchases of shares +Earnings from all forecasts 5

6 A3. FORECASTING ALL-MALE MARKETS ALL-FEMALE MARKETS Prices 200 Prices Periods Periods MIXED MARKETS - FEMALES MIXED MARKETS MALES Prices 200 Prices Periods Periods FIGURE A1. TIME SERIES OF MEDIAN FORECAST PRICES Notes: Each line represents the median of predicted prices for each of the remaining periods. E.g., in the all-male markets the longest line shows the median forecast price in each periods for all remaining 15 periods, the shortest line for one remaining period. The figure depicts the time series of median forecast prices in the all-female market and the all-male markets, as well as for the mixed markets separated by gender. The all-male market figure shows a clear increase in forecast levels right from the start. Thus, males adapt to the observed bubble pattern. As prices in female markets in general show no increase, their forecasts do not rise. In the mixed market some reaction to price changes can be found for both males and females, i.e., prices increase given an increase in recent market prices. The results are qualitatively in line with Haruvy, Lahav, and Noussair (2007). 6

7 A4. GAMBLE CHOICE TASK INSTRUCTIONS AND ANALYSIS A4.1. General Instructions Directions: In this game, you have a chance to earn money. Your earnings will depend on what you do, what others do, and chance, as explained below. 1 When this game is completed, you will be paid the amount you earn in this game. Note: the dollar values in the experiment are measured in US dollars. In this game, you choose One from six possible options. Once you choose an option, a six-sided die will be rolled to determine whether you receive payment A or payment B. If a 1, 2, or 3 is rolled you receive payment A; if a 4, 5, or 6 is rolled you receive payment B. You only play the game once. Examples: If you choose option 1: If you roll 1, 2, or 3 you earn $12.00; if you roll 4, 5, or 6, you earn $ If you choose option 2: If you roll 1, 2, or 3 you earn $8.00; if you roll 4, 5, or 6, you earn $ If you choose option 3: If you roll 1, 2, or 3 you earn $4.00; if you roll 4, 5, or 6, you earn $ If you choose option 4: If you roll 1, 2, or 3 you earn $0.00; if you roll 4, 5, or 6, you earn $ If you choose option 5: If you roll 1, 2, or 3 you lose $4.00 (taken from your show up fee); if you roll 4, 5, or 6, you earn $ If you choose option 6: If you roll 1, 2, or 3 you lose $8.00 (taken from your show up fee); if you roll 4, 5, or 6, you earn $ Decision: Option Payment A Payment B 1 $12.00 $ $8.00 $ $4.00 $ $0.00 $ $4.00 $ $8.00 $48.00 When you are ready please circle the option (1, 2, 3, 4, 5, or 6) that you prefer. Remember, there are no right or wrong answers, you should just choose the option that you like best. 1 The instructions contain a small error, what others do. This does not appear to have caused any confusion among the subjects. No subject commented or asked a question about the phrase, and no subject showed any sign of being unsure of their earnings conditional on their choices, based on interviews with the experimenters and a review of the lab logs for the sessions. 7

8 A4.2. Discussion Note that these lotteries range from a certain outcome of $12, and increase in expected value and variance through option 5; option 6 consists of an increase in variance from option 5, with the same expected value. Thus choosing option 1 indicates extremely high risk aversion, and only subjects who are risk-lovers should prefer option 6. We code the decisions as the option number, 1 6, reflecting the lottery selected, and this provides an index of risk aversion. See Eckel and Grossman (2008b) for further details. Note the measure used in the present paper adds one additional gamble, Gamble 6, to the protocol used in Eckel and Grossman 2008b. On average our experimental results do not substantially vary from Eckel and Grossman (2008b), where the average of 138 males is 3.79 and the average of 120 females is A4.3. Spearman Rank Correlation For neither variable we can reject the Null hypothesis bubble measure and average option choice are independent considering treatments separately. However, we can reject this hypothesis considering all sessions. Thus, risk aversion plays some role overall but it is difficult to disentangle it from the gender effect. Finally there is no effect within treatments. Table A3. Spearman's rho (p): session average of options chosen a Females Mixed Males Total Average Bias (0.17) (0.91) (0.80) (<0.01) Total Dispersion (0.42) (0.64) (0.08) (0.22) Boom Duration (0.09) (0.09) (0.43) (<0.01) Bust Duration (0.35) (0.35) (0.60) (0.02) a Average option, where option 1 = zero risk (highest risk aversion) and option 6 is highest risk (least risk aversion). 8

9 A5. MATH ABILITY TASK A5.1 MATH ABILITY INSTRUCTIONS We also considered a Math Ability Test without monetary incentives in which students had to answer the following questions 1) Phone plan A costs $30 per month and 10 cents per minute. Phone plan B costs $20 per month and 15 cents per minute. How many minutes makes plan A cost the same as plan B?; 2) Multiply 43 and 29; 3) Solve the equation for a: X6/X2 = Xa; 4) Complete the following statement: As X gets larger and larger, the expression 3-(1/X) gets closer and closer to ; 5) Suppose 20,000 people live in a city. If six percent of them are sick, how many people are sick? 6) 80 is 20 percent of A5.2 MATH ABILITY DISCUSSION The question was whether average math ability is correlated with mispricing. Using a spearman rank correlation we cannot reject the null that TotalDispersion and session score of math ability ( # right i=1 ) 6 are independent when taking all session measures into account (n=19). The average frequency of correct answers in all-female markets was 73% and in all-male market was 84% (significantly different using a Mann-Whitney U test with 82 males and 89 females in each treatment, p < 0.001). 9

Northumberland Knowledge Know Guide How to Analyse Data - November 2012 - This page has been left blank 2 About this guide The Know Guides are a suite of documents that provide useful information about

The Analysis of Research Data The design of any project will determine what sort of statistical tests you should perform on your data and how successful the data analysis will be. For example if you decide

Fall 2004, Vol. 3 No. 2 ACADEMIC RISK AVERSION: AN EXPERIMENT TO INTRODUCE BUSINESS STUDENTS TO THE CONCEPTS OF RISK AND UNCERTAINTY. Dr. Hilde Patron Assistant Professor of Economics College of Administration

Lotto Master Formula (v.) The Formula Used By Lottery Winners I. Introduction This book is designed to provide you with all of the knowledge that you will need to be a consistent winner in your local lottery

Chapter 5: Analysis of The National Education Longitudinal Study (NELS:88) Introduction The National Educational Longitudinal Survey (NELS:88) followed students from 8 th grade in 1988 to 10 th grade in

LESSON 14 HOW ARE STOCK PRICES DETERMINED? ACTIVITY 14.1 STOMPING GROUNDS: BUYERS Coffee is your favorite drink. For you and everyone in your family, a good day begins with a nice fresh cup. Stomping Grounds,

Probability and Expected Value This handout provides an introduction to probability and expected value. Some of you may already be familiar with some of these topics. Probability and expected value are

This expansion can only be played with a copy of Power Grid or Power Grid deluxe Art.No.: RIO524 Made in Germany Copyright 2015 www.riograndegames.com 6 55132 00524 1 Warning! Choking hazard - small parts.

Chicago Booth BUSINESS STATISTICS 41000 Final Exam Fall 2011 Name: Section: I pledge my honor that I have not violated the Honor Code Signature: This exam has 34 pages. You have 3 hours to complete this

GCSE Statistics Revision notes Collecting data Sample This is when data is collected from part of the population. There are different methods for sampling Random sampling, Stratified sampling, Systematic

Interpreting Data in Normal Distributions This curve is kind of a big deal. It shows the distribution of a set of test scores, the results of rolling a die a million times, the heights of people on Earth,

MATH 110 Test Three Outline of Test Material EXPECTED VALUE (8.5) Super easy ones (when the PDF is already given to you as a table and all you need to do is multiply down the columns and add across) Example:

KSTAT MINI-MANUAL Decision Sciences 434 Kellogg Graduate School of Management Kstat is a set of macros added to Excel and it will enable you to do the statistics required for this course very easily. To

Statistical Analysis on Relation between Workers Information Security Awareness and the Behaviors in Japan Toshihiko Takemura Kansai University This paper discusses the relationship between information

Chapter 4: Data & the Nature of Graziano, Raulin. Research Methods, a Process of Inquiry Presented by Dustin Adams Research Variables Variable Any characteristic that can take more than one form or value.

Mind on Statistics Chapter 8 Sections 8.1-8.2 Questions 1 to 4: For each situation, decide if the random variable described is a discrete random variable or a continuous random variable. 1. Random variable

DATA ANALYSIS QEM Network HBCU-UP Fundamentals of Education Research Workshop Gerunda B. Hughes, Ph.D. Howard University Quantitative Research What is Statistics? Statistics (as a subject) is the science

GCSE HIGHER Statistics Key Facts Collecting Data When writing questions for questionnaires, always ensure that: 1. the question is worded so that it will allow the recipient to give you the information

Expectation Statistics and Random Variables Math 425 Introduction to Probability Lecture 4 Kenneth Harris kaharri@umich.edu Department of Mathematics University of Michigan February 9, 2009 When a large

MAT 118 DEPARTMENTAL FINAL EXAMINATION (written part) REVIEW Ch 1-3 One problem similar to the problems below will be included in the final 1.This table presents the price distribution of shoe styles offered

Chapter 6 The Tradeoff Between Risk and Return MULTIPLE CHOICE 1. Which of the following is an example of systematic risk? a. IBM posts lower than expected earnings. b. Intel announces record earnings.

Open book and note Calculator OK Multiple Choice 1 point each MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Find the mean for the given sample data.

Chapter 2 An Introduction to Forwards and Options Question 2.1. The payoff diagram of the stock is just a graph of the stock price as a function of the stock price: In order to obtain the profit diagram

Problem 3 If A is divided by B the result is 2/3. If B is divided by C the result is 4/7. What is the result if A is divided by C? Suggested Questions to ask students about Problem 3 The key to this question

Chapter 3.4 Forex Options 0 Contents FOREX OPTIONS Forex options are the next frontier in forex trading. Forex options give you just what their name suggests: options in your forex trading. If you have

STUDENT MODULE 12.1 GAMBLING PAGE 1 Standard 12: The student will explain and evaluate the financial impact and consequences of gambling. Risky Business Simone, Paula, and Randy meet in the library every

There are three kinds of people in the world those who are good at math and those who are not. PSY 511: Advanced Statistics for Psychological and Behavioral Research 1 Positive Views The record of a month

EXPERIMENT GRAPHING IN EXCEL Introduction In this lab you will learn how to use Microsoft Excel to plot and analyze data that you obtain while doing experiments. In this lab you learn how to Enter data

ACCUPLACER Arithmetic & Elementary Algebra Study Guide Acknowledgments We would like to thank Aims Community College for allowing us to use their ACCUPLACER Study Guides as well as Aims Community College

Name: Date: 1. A study is conducted on students taking a statistics class. Several variables are recorded in the survey. Identify each variable as categorical or quantitative. A) Type of car the student

Statistics Chapter 2 Frequency Tables A frequency table organizes quantitative data. partitions data into classes (intervals). shows how many data values are in each class. Test Score Number of Students

238 CHAPTER 3. DISCRETE DYNAMICAL SYSTEMS WITH MANY VARIABLES 3.2 Roulette and Markov Chains In this section we will be discussing an application of systems of recursion equations called Markov Chains.

. Expected Value Objectives. Understand the meaning of expected value. 2. Calculate the expected value of lotteries and games of chance.. Use expected value to solve applied problems. Life and Health Insurers

The Effect of Short Selling on Bubbles and Crashes in Experimental Spot Asset Markets Ernan Haruvy and Charles Noussair University of Texas-Dallas and Emory University ABSTRACT We study the effect of allowing

HOW TO WRITE A LABORATORY REPORT Pete Bibby Dept of Psychology 1 About Laboratory Reports The writing of laboratory reports is an essential part of the practical course One function of this course is to

Report on the Lapse and Mortality Experience of Post-Level Premium Period Term Plans Sponsored by The Product Development Section and The Committee on Life Insurance Research of the Society of Actuaries

SAMPLE MID-TERM QUESTIONS William L. Silber HOW TO PREPARE FOR THE MID- TERM: 1. Study in a group 2. Review the concept questions in the Before and After book 3. When you review the questions listed below,

To begin, look at the face of the calculator. Almost every key on the BAII PLUS has two functions: each key's primary function is noted on the key itself, while each key's secondary function is noted in

Final Exam Review MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A researcher for an airline interviews all of the passengers on five randomly

277 CHAPTER VI COMPARISONS OF CUSTOMER LOYALTY: PUBLIC & PRIVATE INSURANCE COMPANIES. This chapter contains a full discussion of customer loyalty comparisons between private and public insurance companies

Chapter 7 Section 7.1: Inference for the Mean of a Population Now let s look at a similar situation Take an SRS of size n Normal Population : N(, ). Both and are unknown parameters. Unlike what we used

This document contains Chapter 2:, Data Analysis, and strand from the 28 California High School Exit Examination (CAHSEE): Mathematics Study Guide published by the California Department of Education. The

STATISTICS 8, FINAL EXAM NAME: KEY Seat Number: Last six digits of Student ID#: Circle your Discussion Section: 1 2 3 4 Make sure you have 8 pages. You will be provided with a table as well, as a separate

Textbook Reference: Chapter 9.5 Measuring the Power of a Test An economic problem motivates the statement of a null and alternative hypothesis. For a numeric data set, a decision rule can lead to the rejection

Contemporary Mathematics Online Math 1030 Sample Exam I Chapters 12-14 No Time Limit No Scratch Paper Calculator Allowed: Scientific Name: The point value of each problem is in the left-hand margin. You

DESCRIPTIVE STATISTICS The purpose of statistics is to condense raw data to make it easier to answer specific questions; test hypotheses. DESCRIPTIVE VS. INFERENTIAL STATISTICS Descriptive To organize,

Statistics Review Solutions 1. Katrina must take five exams in a math class. If her scores on the first four exams are 71, 69, 85, and 83, what score does she need on the fifth exam for her overall mean

STA 3024 Practice Problems Exam 2 NOTE: These are just Practice Problems. This is NOT meant to look just like the test, and it is NOT the only thing that you should study. Make sure you know all the material

1. Jack and Jill share 18 in the ratio 2:3 Work out how much each person gets. Jack.. Jill... (Total 2 marks) 2. (a) Express the following numbers as products of their prime factors. (i) 56 (ii) 84.. (4)

Data Analysis Plan The appropriate methods of data analysis are determined by your data types and variables of interest, the actual distribution of the variables, and the number of cases. Different analyses

addend A number that is added to another in an addition problem. 2 + 3 = 5 The addends are 2 and 3. area The number of square units needed to cover a surface. area = 9 square units array An arrangement

Co-Curricular Activities and Academic Performance -A Study of the Student Leadership Initiative Programs Office of Institutional Research July 2014 Introduction The Leadership Initiative (LI) is a certificate

1 Valor Christian High School Mrs. Bogar Biology Graphing Fun with a Paper Towel Lab I m sure you ve wondered about the absorbency of paper towel brands as you ve quickly tried to mop up spilled soda from

Unit 19: Probability Models Summary of Video Probability is the language of uncertainty. Using statistics, we can better predict the outcomes of random phenomena over the long term from the very complex,

Dear Teacher, Thank you for considering Math Behind the Market for use with The Stock Market Game (SMG) program in your classroom. Fully sponsored by the McGraw-Hill Companies, Math Behind the Market provides